CAG pulls up CBDT for accounting lapses in Sahara

CAG pulls up CBDT for accounting lapses in Sahara
PRESS TRUST OF INDIA

NEW DELHI, DEC 28: The Comptroller and Auditor General of India (CAG) has pointed out accounting lapses by Central Board of Direct Taxes (CBDT) in dealing with Sahara group companies which resulted in a revenue loss of Rs 61 crore.

An "audit scrutiny revealed that the orders of the CBDT on transfer of the case records of the Sahara group from Lucknow to Delhi for assessment were irregular, unwarranted and beyond the scope of the provisions of the Income Tax Act," CAG said in a report tabled in Parliament.

On avoidable mistakes in computation of income in the case of Sahara India Savings and Investments (now Sahara India Financial Corporation), the CAG said "due to arithmetical mistake, total amount of collection of deposits made by its agent during the year was taken as Rs 169.76 crore only instead of Rs 289.86 crore." The mistake resulted in an under-assessment of income by Rs 120.10 crore and consequent short-charge of tax of Rs 46.51 crore, the report added.

Similarly, in the case of Sahara IndiaMutual Benefits Company, CAG said audit scrutiny of the company revealed that the assessing officer disallowed 50 per cent of total deposits collected during the year, resulting in an amount of Rs two crore being taken less. This resulted in an under-assessment of income by an equivalent amount (Rs 2 crore) involving short-charge of tax to the tune of Rs 2.09 crore (including interest), added CAG.

In another instance, the CAG pointed out that Sahara India Ltd had credited Rs 20 lakh received from two persons for addition to their capital share but finally did not do it. "The omission resulted in under-assessment of income of Rs 20 lakh with consequent short levy of tax including interest of Rs 17.46 lakh," CAG said.

While assessing the books of the same company, the CAG said in its report, the assessing officer treated service charges at the rate of 10 per cent of the total collection of Rs 289.86 crore as its income. "However, while calculating the amount of service charges it was erroneously worked outto Rs 16.98 crore instead of Rs 28.98 crore," it said.

Sahara India was collecting deposits under various schemes for its sister concerns apparently engaged in the business of deposit mobilisation as an agent. "The mistake resulted in under-assessment of income by Rs 12.01 crore with short-charge of tax amounting to Rs 11.77 crore including interest and surcharge," CAG inferred.

CAG also noted non-levy of surcharge on another Sahara group company - the Sahara India Marketing - by tax authorities. Audit scrutiny of Sahara India Marketing revealed that though income tax was charged at the rate of 40 per cent, surcharge leviable thereon at the rate of 12 per cent was, however, not levied, CAG noted.

"This mistake resulted in short-charge of tax of Rs 17.28 lakh (including interest)," the report said. Although the assessing officer had raised demand of Rs 381 crore from the Sahara group while completing the 26 time barring assessments out of the 29 by year end 1997, it was "considered favourably by theboard", it said.

CAG also said that investigation trial into certain deposits, property valuations, loans to directors and their committing huge investments, and follow-up action on notices issued to field officers was completely discontinued with the change of the incumbent assessing officer.